"The third quarter, in terms of economic environment, was a mixed sort of a bag. On one hand we saw anchoring of the rupee and on other hand we saw increase in the interest rates.

Overall, it was a tough operating environment but in spite of the headwinds we saw in the quarter, we have come up with very decent results," bank's Managing Director and Chief Executive Officer Romesh Sobti told reporters here.

The mid-sized private lender's other income rose 35 per cent to Rs 480.27 crore in the October-December quarter as against Rs 355.80 crore in the year-ago period, largely on account of an increase in fee income. Net interest income grew 26 per cent to Rs 730.08 crore from Rs 577.80 crore last year.

The Pune-based bank took a mark-to-market loss for entire Q3 as compared to only one month in the previous quarter, Sobti said. "In this set of results (Q3), we have absorbed a mark-to-market loss of almost Rs 64 crore."

In the second quarter the bank had taken a MTM loss of Rs 50 crore.

Net interest margin for the December quarter stood at 3.65 per cent as against 3.46 per cent. "Cost of deposits did go up by 17 basis point but despite of that our NIM remains at 3.65 per cent," Sobti said.

The bank's asset quality slipped marginally, with gross NPA rising to 1.18 per cent from 0.99 per cent year ago.

He said the commercial vehicle book, a major concern on the asset quality front for the bank, will start reporting better performance in Q4 or the first quarter of next fiscal, as against the earlier expectation of a turnaround in Q3.

The bank's restructured book stood at Rs 163 crore as at December 31. Current account-saving account (CASA) ratio in the December quarter rose to 32.16 per cent. Total advances in Q3 rose 24 per cent, while deposit grew 10 per cent.

Sobti said the bank, which currently has 573 branches, is planning to increase the number to 625 by March-end. The bank's scrip closed at Rs 404.95 apiece, down 2.84 per cent on